Yesterday, the Wall Street Journal published an article highlighting the surge in what it calls “ultralong” bonds, defined as having a maturity of more than 30 years. The findings are simply stunning. In what may seem counterintuitive, bond yields at hundred year plus lows in many countries has led major investment firms to rush into ever riskier and longer duration fixed income securities just to earn some income. This has opened the floodgates to governments and corporations looking to lock in low yields on debt they won’t have to pay back for a generation.

Just to name a few, this year we have already seen a 100-year bond sale by Mexico, two separate 50-year bond issuances by Canada, and wait for this one, Spain of all countries is set to try to sell a 50-year bond!

Global sales of sovereign and corporate bonds that mature after 30 years have reached $142.5 billion this year as of Tuesday, a 22% rise from the same period last year and a 55% jump from the same period in 2012, according to data provider Dealogic. Their growth far outpaces sales of government and corporate bonds due in 30 years or less. Those bond offerings totaled $5.236 trillion so far this year, a 4.6% increase from the same period in 2012.

France, Austria, Switzerland, Japan and the U.K. have sold ultralong bonds this year denominated in local currencies. In the developing world, Mexico sold a 100-year bond in March denominated in British pounds. Canada sold its first 50-year bond in April and sold more in July.

In the corporate world, McDonald’s Corp. sold a 40-year £300 million ($506 million) bond in June denominated in British pounds.

Caterpillar Inc. in May sold $500 million of 50-year bonds yielding 4.767%, only 1.375 percentage points more than 30-year U.S. Treasurys at the time.

But the robust demand for long bonds highlights a number of powerful factors often ignored by analysts and traders. These include the longer-term perspective of buyers such as pensions and insurers, who struggle to match future obligations with long-lived, income-generating assets, and the shrinking pool of long-term debt available to investors amid hefty Fed purchases.

“You pick up extra yields from ultralong bonds,” said Erik Schiller, senior portfolio manager on global government bonds at Prudential Financial Inc.’s fixed-income unit, which oversees more than $400 billion. “People care about income right now.”

Institutional buyers have been flocking to the debt. The California Public Employees’ Retirement System, the largest public pension fund in the U.S., this year approved investment goals that stand to boost bondholdings at the expense of stocks. A Calpers representative declined to elaborate.

Ah, Calpers. The largest pubic pension in the nation, which seems to have no clue what it’s doing. But I’ll get to that later…

There are more ultralong bonds in the pipeline. Japan is scheduled to sell a 40-year bond late this month, according to the information on the Ministry of Finance’s website.

Spain’s government has indicated in recent months that it is considering selling a 50-year bond before the end of the year. The U.S. has asked large banks whether it should consider selling ultralong bonds.

As promised earlier, Calpers once again recently demonstrated an incredible degree of incompetence. Pension360 reported that:

You probably trust your doctor with your life. But with your money? Many people might balk at the notion of their doctor making their investment decisions for them.

But back in 2007, CalPERS made a big bet: a $705 million investment in a private equity fund, Health Evolution Partners Inc., specializing in health care companies.

The CEO of the fund, David Brailer, is a nationally renowned physician who had previously been the “health czar” under George W. Bush. But this was his first foray into the investment space, and he had no experience running an investment fund or making private equity investments.

The reason for belaboring this particular bad deal is that CalPERS is widely seen as savviest public pension fund investing in private equity. Yet there’s no justification for this self-inflicted wound. A much smaller investment could have been justified as an interesting experiment. Brailer’s past prominent role leads one to suspect that there’s more to this story than the press has ferreted out. And if CalPERS can get itself in a costly mess like this, imagine what lurks at other public pension funds.

I have to admit, I just started laughing when I was still reading the header for this article, and I still haven't stopped. People really, really, are stupid. As P.T. Barnum observed, there's one born every minute. Boy, I just can't wait to get my supply of fifty year bonds ! It'll be great. LOL. And these are literate grown-ups; supposedly. How fucking crazy do you have to be to buy a fifty year bond issued in a paper currency that's worth whatever the issuer wants it to be worth? Wouldn't it be great to have a $100,000 Bond that would buy a used pick-up truck? Wow; what an opportunity.

Caterpillar sold $500 Million in fifty year bonds. !!! Oh, stop; I can't stop laughing. Wake up; you dumb fucks, Caterpillar won't even exist in twenty years. All this is called "the folly of chasing interest rates". It's one of the fundamental Kindergarten-level wrong headed ideas that lead to financial ruin; over and over and over again. Desperation leads the money managers to pretend that this interest will actually be paid. Ah, Calpers; one of my favorite subjects. Calpers is utterly doomed. Everyone was going to be rich when they retired; remember that one? That's right up there with the electricity to cheap to meter. You don't remember that one? We got a little news letter with our PGE bill in around 1959 at my paretns house, telling us about the electricity that would be too cheap to meter. Look; just buy Silver; as much as you can. This is your competition; you're going to look like three geniuses.

At these historic and manipulated low rates, every country should be issuing as much long term debt as they can. When rates go back up to attract investors and savers, countries will not be able to afford higher rates if they have not already locked in long term low rates.

Institutional buyers have been flocking to the debt. The California Public Employees’ Retirement System, the largest public pension fund in the U.S., this year approved investment goals that stand to boost bondholdings at the expense of stocks. A Calpers representative declined to elaborate.

Ah, Calpers. The largest pubic pension in the nation, which seems to have no clue what it’s doing. But I’ll get to that later…

WRONG! That's the first thing they've done in a decade that made any sense at all.

Can I get like a 2000 year mortgage on my house? you know so we can reduce the monthly payments to like 50$ a month? My progeny in like 900 years should be able to pay it off with inflation adjustments alone . . .

Lower yield safer bonds like municipal bonds are going to be a big winner if this goes into a deflationary spiral.

That 1% for example is going to be worth double/triple relative to purchasing power if the currency tanks.

It maybe 1% now but if the currency deflates by 50% or the dollar collapses and they reissue a new currency valued to balance the debt on hand for the government which would be something 60% deflation or so that 1% is not longer 1% in relation to purchasing power. Those yields will be inflationary. Junk bonds well good yields now but junk doesn't always pay up when it claims it will.